April 21, 2010

Know More, Spend Less

If people knew what health care really costs, it could save the system money

Educating individuals about the costs of health care might save money and lead to a more efficient use of the health-care system, according to a research report.

The study, published in the American Journal of Managed Care, found that employees who knew more about overall health-care costs went to hospital emergency rooms less often than employees who were not as well informed.

“We know how much electricity costs us, and we know how much our groceries cost, but as patients, costs of our health care remain vague,” says Amy Lischko, an assistant clinical professor of public health and community medicine at Tufts School of Medicine, who conducted the study with James Burgess Jr., an associate professor of health policy and management at Boston University School of Public Health.

“As patients, we know that we might have a co-payment, but we rarely know the underlying costs or the differences in costs depending on our utilization of the health-care system,” Lischko says.

Study participants who knew their co-payments for office and emergency room visits had more office visits and fewer trips to the emergency room. “Given the enormous costs of emergency room visits in contrast to office visits, it appears that more transparency about costs of health-care services” could help contain expenditures on health services, says Burgess.

Lischko and Burgess surveyed 1,500 Massachusetts state employees during a time when their health insurance co-payments were going up to determine how much they knew about cost sharing and health-care utilization. The survey data was then compared with medical plan claims data for the study participants and their dependents.

“Although this study cannot be generalized across the country, it does argue for developing strategies to educate patients better about their cost-sharing responsibilities so that costs for everyone can be contained,” says Lischko, the former commissioner of the Massachusetts Division of Health Care Finance and Policy. “As we implement health-care reform, and as insurance becomes available to millions of previously uninsured people, we have an unprecedented opportunity to provide incentives to use the system efficiently and to educate people about the effects of their behavior on overall health-care costs.”

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